Home » UK property market is grinding to a halt because of the coronavirus
In the United Kingdom, mortgage providers have announced they will give home buyers who have already signed contracts the option to extend their mortgage offers for up to three months.
The measure will allow customers to push their moves back to a later date, according to a statement from UK Finance, the trade organization for the country’s banking and finance sector. The policy will help people whose moving plans have been disrupted by a loss of work as well as self-isolation policies and social distancing recommendations.
It could also alleviate pressure on banks. The capacity of lenders is being stretched at a time when they are facing internal operational headaches, splitting workforces between headquarters in central London and backup sites miles outside the city and home offices. Their call centers face particular difficulties.
“It is clearly not appropriate for people shielding or self-isolating to move home,” the chief executive of UK Finance, Stephen Jones, said in a statement. “Therefore … lenders, conveyancers and other professionals are working together to enable these customers’ moves to be delayed.”
The UK government said in a statement Friday that home renters and buyers should, where possible, delay moving to a new house, even if a sale has been completed. It also warned sellers that while they may put their home on the market, potential buyers should not visit the property.
“There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times,” the government said in its statement.
Activity has already fallen off significantly, according to Zoopla. The real estate website said Thursday that demand from buyers over week ending March 22 was down 40% on the previous seven days.
“The initial impact of external shocks is to reduce consumer confidence and put a brake on housing demand and the number of people moving home, which we can see in our latest figures,” said Richard Donnell, director of research and insight at Zoopla.
Lenders may also be less willing to offer mortgages because many customers could see a dramatic change in income over the next several months as a result of the pandemic. Anticipating the massive hit to the UK economy and workforce, the government earlier this week unveiled an unprecedented intervention, saying it will cover 80% of worker salaries for at least the next three months up to a maximum of £2,500 ($2,900) a month.
“People who would have been preparing and expecting to move house in the coming weeks now face a wait until Covid-19 restrictions can be lifted … Our heads are clear that it would be unfair for these people to have to start their mortgage application all over again once life returns to a more normal state,” Robin Fieth, chief executive of the Building Societies Association, said in a statement.
Lloyds Banking Group said Thursday it is adjusting some product offerings to manage the situation. It has temporarily withdrawn new mortgage and remortgage products with loan to value ratios of over 60% available via its intermediary brands. Customers can still apply for a mortgage online.
Banks in the United Kingdom have also agreed to postpone mortgage payments for up to three months for people affected by the coronavirus.